Victorian Premier Denis Napthine and his deputy Peter Ryan have emerged empty-handed from emergency talks in Canberra with the Abbott government, aimed at finding replacement jobs and an economic adjustment package for tens of thousands of car sector workers.

Instead the Premier was reduced to claims of broad support, while getting nothing concrete.

The hastily arranged meeting took place on Tuesday afternoon less than 24 hours after Toyota Australia stunned both governments with the news of its impending closure in three years, sending 2500 direct employees to the dole queues and countless more in the broader car sector.

An inexplicably upbeat Dr Napthine praised the federal government for making several senior ministers available for the talks, arguing that Prime Minister Tony Abbott understood the implications for his state.

But while the Victorians presented a wish-list of road-building and other public projects designed to provide jobs in the construction phase and enhanced economic performance after that, the Premier received no commitments beyond a promise of more discussions.

”Tony Abbott says that he [wants] to be the infrastructure PM and I welcome that,” Dr Napthine told reporters in Canberra. ”I think that is a great title for any prime minister to aspire to and we in Victoria have a range of infrastructure projects that we’re very keen to have the federal government involved with.”

He described the meeting as a ”very, very productive discussion across a range of projects”.

”We have made a very strong case for defence work in Victoria, particularly with our ship-building at BAE Systems at Williamstown.

”There’s also the opportunities for training at our air force base at Sale.”

But on the key question of federal funding for Metro Rail, Dr Napthine was deliberately unclear, repeatedly refusing to say if the project had found any new chance of support.

”We had a very, very productive discussion across a range of projects, whether they be defence projects, whether they be infrastructure projects and of course a number of other parts to that discussion,” he repeated.

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Federal politics: full coverageAbbott warns of more economic shocks to comeJacqueline Maley: Knickers in a twist over Toyota jobs

Australia faces a bleak future unless energy is found to renew the country’s manufacturing base in the wake of the car industry’s departure, economists and industry groups have warned.

”We have got a choice: if we do not chase new markets, then the alternative is that we are going to have to cut wages,” said economics and policy expert John Freebairn at Melbourne University.

The comments follow Toyota’s announcement it would cease manufacturing in Australia in 2017. It means the end of car making in the country after Ford and Holden also said they would stop building cars here by 2017.

Up to 50,000 jobs are now likely to go across the car making and components sector in the next three years.

Professor Freebairn said the high-wages Australian economy was going through enormous structural changes.

”Unless you are in high-technology, innovative products, you are not going to survive. If you are in low-technology, labour-intensive products, imports are going to knock you over every time,” he said.

He said car component makers had been very innovative in the products they made, using newer materials that were lighter and less prone to wear and tear. He said there were many similar scientific and medical equipment success stories in Australia.

The federal and state governments needed to better support firms to establish new products and production systems, he said. ”My guess is that the components industry is not just going to fold up quickly; some of those guys may actually innovate and survive.”

He also called on the Abbott government to end the 5 per cent tariff on imported cars, which was there to protect the domestic industry. ”The rationale … after 2017 is zero.”

Roy Green, dean of the University of Technology Sydney business school, also warned that Australia could end up ”a country that simply exports unprocessed raw materials, with supplementary activity by banks and related services, and with restaurants and hairdressers that sell services to each other”.

He said if this were the case, Australia’s First-World living standards ”will not be sustainable – we would be heading down the Argentina road”. Professor Green called on the federal government and states to tackle the issue ”in a coherent way”.

”We can identify areas where we have a comparative advantage, such as natural resources and also a competitive advantage, which is the processing of those materials or food, for example,” he said.

He said Australia also had a competitive advantage because of its high levels of education, its ”ingenuity” and its research and development knowledge base. ”The energy is here, but we need to find it within ourselves, and we tend to find it in times of adversity – not in times of bounty like the recent commodity boom where we lulled ourselves into a sense of complacency.”

Australian Industry Group chief executive Innes Willox also said the nation needed to look at ”where we have competitive advantage, and what are the cutting-edge technologies we need to develop”.

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“I fully share the dismay of members opposite, of members on all sides of this house”: Tony Abbott. Photo: Andrew MearesFederal politics: full coverageJacqueline Maley: Knickers in a twist over Toyota jobsComment: No fair go for Australia in ‘laissez-faire’ agenda

Tony Abbott has told his colleagues that there would be more economic shocks to come in the wake of Toyota’s decision to pull out of Australia.

The warning came as the manufacturing sector reeled from the news amid fears that related high-technology manufacturing might also face extinction.

Mr Abbott told Parliament he was as devastated as anyone by the car company’s planned departure.

”I fully share the dismay of members opposite, of members on all sides of this house, at the announcement that Toyota made yesterday,” he said. ”Every single one of us, every single one of us, is devastated by this announcement, just as we were devastated by the announcement in December that Holden would cease manufacturing.”

Earlier in the day, he warned his MPs that economic adjustment was never easy. ”There have been economic shocks and there will be more to come,” he told the Coalition party room, a spokesman said.

”We feel the concern for people in painful economic circumstances but our concern shouldn’t allow us to depart from the truth that only profitable businesses create jobs.”

But with pressure intensifying from the opposition to explain what was done to convince Toyota to stay, Mr Abbott counselled against the folly of governments ”chasing businesses down the street with a blank cheque”.

The issue dominated the first parliamentary question time for the year, with the opposition accusing the government of callous indifference to workers in the automotive sector.

Mr Abbott said Toyota would have cut production costs but had been frustrated. ”I very much regret the fact that when Toyota just a few months ago sought to talk to their workers about improving productivity in their factory, they were denied because of the operation of our system that opportunity,” he told Parliament.

The comments were a reference to the refusal by automotive sector unions to allow the company to vary enterprise bargaining agreement provisions as it moved to cut costs in its Australian operation.

Toyota confirmed on Tuesday that it would continue with a challenge to the recent Federal Court decision disallowing any changes to its EBA outside of the specified variation conditions. The government, through Workplace Relations Minister Eric Abetz, also confirmed that it would persist in backing the Toyota challenge.

In Parliament, Mr Shorten accused him of blaming automotive workers on $50,000 a year for the company’s withdrawal.

The opposition stepped up its claim on Tuesday that Toyota had been planning to build two new models in Australia from 2017 and that those plans were being developed as recently as the second half of 2013, but the withdrawal of Holden prompted a rethink at the makers’ Japanese headquarters.

Former industry and innovation minister Kim Carr has revealed he was in active discussions with Toyota management during the final days of the Labor government about the future of the industry. He was confident the cars would have been built here subject to suitable financial assistance. One of them was a new generation Camry.

The claim appears to be supported by a Toyota submission made to the government’s Productivity Commission inquiry into the automotive industry in December. In its submission, the car maker listed as its key request an auto industry policy described as ”a long-term, consistent, globally competitive policy suitable for the Australian context to attract future investment”.

Mr Abbott’s office confirmed on Tuesday that the Prime Minister had received no advance notice of the Toyota decision.

The company’s global head Akio Toyoda, its Australian chief Max Yasuda, and three other executives flew to Canberra on Monday night for a 9pm meeting with Industry Minister Ian Macfarlane.

Mr Abbott also attended for a brief period. However, it was made clear that the company’s mind was made up and it decision to leave was irreversible.

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Federal politics: full coverageAbbott warns of more economic shocks to comeIan Porter: No fair go for Australia in ‘laissez faire’ agenda

What will the economy look like without the three big car manufacturers and suppliers? Pretty much the same as it does now.

Twenty years ago, manufacturing provided one in every seven Australian jobs, about 13.5 per cent. Today it’s 8 per cent.

Two industries have filled the gap: professional, scientific and technical services, whose share of employment has climbed from 5.5 per cent to 7.7 per cent; and healthcare and social assistance, whose share has risen from 10 per cent to 12 per cent. Australia has become more of a brain-work economy and more of a service economy, and the transition isn’t new.

The loss of the further 50,000 jobs tied up in car manufacture is not going to change things much more. Manufacturing employs 934,000 people in total.

Steve Bracks, the former Victorian premier who chaired the Bracks automotive review for the Rudd government, believes some of the component manufacturers will stay. Futuris Automotive sells seats, trims and upholstery worldwide. Air International exports air-conditioning systems.

Each month, about 350,000 people leave their jobs and 350,000 gain them. A loss of an extra 50,000 over several years as the car manufacturing industry closes would scarcely make a dent, especially if – as is likely – many of the sacked workers move to other jobs.

But total jobs growth has stalled. The number of people in work is slipping at the rate of 600 a month. Tony Abbott’s promise to “produce 1 million new jobs in five years” is one he won’t keep.

In Parliament on Tuesday, Treasurer Joe Hockey talked tough, saying “now is the time to fix the budget”. But with jobs growth dead and the collapse of car manufacturing making things a little worse, there is a limit to how much it is wise to cut back in his first budget.

Another previously legislated measure will depress the economy in July. The Medicare levy will climb from 1.5 per cent of most salaries to 2 per cent to fund the disability insurance scheme.

Budgetary pressures are likely to put on hold another move Hockey could otherwise make to salvage something positive out of the exit of Ford, Holden and Toyota.

He could axe tariffs on imported cars. After all, there will soon be no local industry left to protect. This would bring down the landed price of each car by 5 per cent. He could also abolish the so-called luxury car tax, now at 33 per cent, the rationale of which was also partly to protect the local industry.

But it would cost him money he does not have. If he did scrap tariffs, he would have to replace them with something else. As far as revenue raisers go, tariffs on imported cars are pretty efficient, right up there with the goods and services tax. Hockey would not want to replace them with something worse.

The impending departure of the big three has given him another opportunity though. About the middle of last year, his predecessor, Labor’s Chris Bowen, announced a plan to raise $1.8 billion by properly taxing cars provided to workers as part of salary packages. Abbott and Hockey opposed it, arguing that concessional treatment was needed to ensure cars continued to be made in Australia. It isn’t now.

Twitter: @1petermartin

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Keen spectator … Russia’s President Vladimir Putin says criticism of the Sochi Winter Olympics is unfair. Photo: AFP PhotoSochi: Western criticism of Russia’s Winter Olympics was reminiscent of Cold War ambitions to hold the Soviet Union back, President Vladimir Putin said on Monday, despite signs that the world was warming to the most expensive Games ever held.

The build-up to the Olympics in Sochi on the Black Sea coast has been overshadowed by threats of Islamist militant violence, an international outcry over a contentious “anti-gay propaganda” law and allegations of widespread corruption and profligacy.

As the third full day of competition drew to a close, that hostility had begun to melt away and the thrills and spills on snow and ice, and a hugely popular Russian gold in the team figure skating on Sunday, began to win the critics around.

Monday’s biggest drama was undoubtedly in the men’s 500 metre speed skating at the Adler Arena, where, in a Dutch sweep of the medals. Michel Mulder beat Jan Smeekens by one hundredth of a second, having initially been announced as second.

“It was a kick in the gut,” said Smeekens, who thought he had won for about “two or three minutes” before the scoreboard adjusted his time. “I was so ecstatic that I won, I can’t describe it.”

Mulder’s twin brother Ronald grabbed bronze as the Dutch continued their dominance of the sport.

The excitement did not stop Putin, who has staked his personal and political prestige on a successful Games, from taking a swipe at his detractors, suggesting he was still smarting from criticism he always maintained was unfair.

“Back in Cold War times the theory of containment was created,” he told a televised public meeting in Sochi.

“This theory and its practice were aimed at restraining the development of the Soviet Union … what we see now are echoes of this containment theory. This, unfortunately, has also applied to the Olympic project.

Putin also said the Olympics were playing a “positive role” in relations between Russia and its 2008 war foe Georgia, emphasising that he believed flights set up between Sochi and the Georgian capital Tbilisi should continue after the Games.

Canada on top

A day earlier, the 61-year-old had been all smiles, as state television captured Putin congratulating the victorious Russian skaters, “high fiving” with young volunteers, drinking beer and urging the home team to greater sporting glory.

On the team was diminutive 15-year-old Julia Lipnitskaya, whose breathtaking performance melted hearts and had commentators in the United States, as well as Russia, gushing over a superstar in the making.

“Good job guys, my congratulations to you all,” Putin said, addressing the winning team crowded around him. “You have a lot of work ahead of you here, so don’t relax.”

But there were no more gold medals for Russia on Monday.

Defending champion Alex Bilodeau led a Canadian one-two in the men’s freestyle skiing moguls, putting his country atop the medals table, which now stands at four golds, three silvers and two bronze.

France claimed its first title of the Games when Martin Fourcade won the biathlon 12.5km pursuit. Ole Einar Bjoerndalen of Norway finished fourth to miss out on what would have been a record 13th Winter Games medal.

In the high-velocity, notoriously unpredictable sport of short track, Canada’s Charles Hamelin grabbed 1500m gold before lunging over the barriers to wrap his girlfriend and team mate Marianne St-Gelais in a hug.

Germany’s Maria Hoefl-Riesch retained her Olympic super combined title with a slalom surge amidst the peaks of the Caucasus mountains.

In Tuesday’s action the first-ever medals in women’s ski jumping will be awarded, in the normal hill competition, one of eight golds up for grabs.

The American and Canadian heavyweights of the men’s ice hockey competition had their first practice on Monday with attention already turning to Saturday’s mouth-watering clash between the US and Russia that will bring back memories of the “miracle on ice” at Lake Placid in 1980 when the Americans shocked the dominant Soviets to win 4-3.

Winning locals over?

A Russian victory in that game would further enhance the mood among locals. Even some of those worst affected by years of disruption caused by huge infrastructure projects in Sochi appear to be won over by the gleaming new Olympic park.

“It’s just fantastic,” Sergei Klyuyev, from the Adler area where the park was built, said as he walked through with his family on Sunday, admiring the state-of-the-art stadiums.

“There’s been building work here for five years but look at all this around us. We regret nothing, not even the cost.”

Putin wants to use Russia’s first Winter Games, which cost $51 billion to stage, to project the country as a resurgent nation that belongs among the world’s elite powers.

He has defended the scale of the project, saying it helped shield Russia from the worst of the financial crisis.

Not all Russians are convinced, however. A recent survey by independent pollster Levada showed 47 per cent of them believe the cost of the Games has soared because funds have been embezzled or mismanaged.

Norway, bidding to host the 2022 Winter Olympics, said in Sochi on Monday it would limit its budget to around $5 billion.

Included in Russia’s eye-watering Winter Games costs is a major security operation, as Islamist militants based in nearby Chechnya and other North Caucasus regions have threatened to launch attacks on Sochi.

Some 37,000 security personnel are on high alert in and around Sochi, although officials believe the risk of militant violence is greater elsewhere in Russia.

A major attack during the Games would embarrass Putin, who launched a war to crush a rebellion in Chechnya in 1999.

Russian police killed four suspected militants in a shootout in Dagestan province, some 600 kilometres from Sochi on the other end of the Caucasus Mountain chain, law enforcement officials said on Monday.

There was no indication the gun fight on Saturday was connected with the Games.

Reuters

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